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Highlights—May 5, 2007

  • Public Broadcasting System (PBS): Lean and Mean: 150,000 U.S. layoffs for IBM? By Robert X. Cringely. Excerpts: Last year I wrote a series of columns on management problems at IBM Global Services, explaining how the executive ranks from CEO Sam Palmisano on down were losing touch with reality, bidding contracts too low to make a profit then mismanaging them in an attempt to make a profit anyway, often to the detriment of IBM customers. Those columns and the reaction they created within the ranks at IBM showed just how bad things had become.

    Well they just got worse.

    This is according to my many friends at Big Blue, who believe they are about to undergo the biggest restructuring of IBM since the Gerstner days, only this time for all the wrong reasons.

    The IBM project I am writing about is called LEAN and the first manifestation of LEAN was this week's 1,300 layoffs at Global Services, which generated almost no press. Thirteen hundred layoffs from a company with more than 350,000 workers is nothing, so the yawning press reaction is not unexpected. But this week's "job action," as they refer to it inside IBM management, was as much as anything a rehearsal for what I understand are another 100,000+ layoffs to follow, each dribbled out until some reporter (that would be me) notices the growing trend, then dumped en masse when the jig is up, but no later than the end of this year.

    LEAN began last week with a 10-city planning meeting for Global Services, which wasn't, by the way, to decide who gets the boot: those decisions were apparently made weeks ago, though senior managers have been under orders to keep the news from their affected employees.

    If you work at IBM Global Services, ask your boss outright if you are on the list to be fired. It puts the boss in a bind, sure, but might lead to a sort of "Alice's Restaurant" effect in which hypocrisy is confronted and exposed.

    LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division. Last week's LEAN meetings were quite specifically to find and identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. This latter part is with the idea that once extraneous work is eliminated, it will be easier to move the rest offshore.

    All this is supposed to happen by the end of 2007, by the way, at which point IBM will also freeze its U.S. pension plan.

    The point of this has nothing to do with the work itself and everything to do with the price of IBM shares. Remove at least 100,000 heads, eliminate the long-term drag of a defined-benefit pension plan, and the price of IBM shares will soar. This is exactly the kind of story Wall Street loves to hear. Palmisano and his lieutenants will retire rich. And not long after that IBM's business will crash for reasons I explain below.

    I am told there is a broad expectation at all levels of IBM familiar with the LEAN plan that it will cause huge problems for the company. Even the executives who support this campaign most strongly expect it to go down poorly with employees and customers, alike. But in the end they don't care, which shows that only the reaction of Wall Street matters anymore.

    So we can expect round after round of layoffs, muted a bit -- as they were back in the Gerstner days -- by some of those same people being hired back as consultants at 75 percent of their former pay (50 percent of their former cost to the company since they won't be getting benefits). Throw in some overtime and it won't look bad on paper for the people, but it is also very temporary.

    Taking a pure business school approach to this news, it probably doesn't look so bad for IBM. What's wrong with a multinational corporation moving work to its own overseas divisions? Squint hard enough and it can even look like good management. Global Services IS overweight and inefficient. Something has to be done and the company has already considered (and apparently rejected) a range of options, right up to putting Global Services on the auction block.

    The problem with LEAN is that offshoring on this scale creates huge communications and logistical problems, doesn't generally improve customer relations, and won't save money for years without the parallel gutting of the pension plan.

    And it is just plain mean.

    This is a policy based on perception. Streamlining and downsizing look good to customers unless it is their project that is being chopped, because implicit in LEAN is that Global Services will be eliminating not just employees but customers, too -- customers whose contracts were underbid and whose projects may never be profitable for IBM. Maybe such axing of customers is necessary, probably it is inevitable, but it hardly has a ring of corporate honesty. Customers to be dropped haven't yet been notified, either.

    It is especially disconcerting for an action of this scale to take place at a time when many companies (including IBM) are complaining about a shortage of technical workers to justify a proposed expansion of H1B and other guest worker visa programs. What's wrong with all those U.S. IBM engineers that they can't fill the local technical labor demand? They can't be ALL bad: after all, they were hired by IBM in the first place and retained for years.

    What is unstated in this H1B aspect of the story is not that technical workers are unavailable but that CHEAP technical workers are unavailable. Lopping off half the technical staff, as Global Services is apparently about to do, will eliminate much of the company's traditional wisdom and corporate memory in an act that some people might label as age discrimination.

    The worst part of all is that nobody at IBM I have talked to thinks this can or will help the business. It will probably just speed up the death spiral.

  • Yahoo! message board post: "Re: PBS Article" by "rondo_74172". Full excerpt: An interesting comment after the article... "I have been with IBM Global Services for over 15 years, and I fear my "value" will come to an end not for any lack of skill or contribution on my part, but solely due to the myopic drive by the executives to make Wall Street happy, thereby maximizing their own net worth due to the enormous number of shares they all own."

    One internal rumor regarding LEAN was that the external consultancy hired to actually perform the analysis was discharged after their principal finding was that IBM is far too top heavy in the executive and management ranks. Not having heard the answer they thought they were paying for, the executives subsequently took ownership of LEAN to pursue the path they had already planned.

    Once again, those guilty of plundering and wrecking a formerly great company will retire to a continued life of wealth and ease just about the time the remaining shell implodes.

  • Yahoo! message board post: "Re: PBS Article" by "bits_bytes_and_bugs". Excerpts: Rondo - That is EXACTLY how my coworkers (including my manager) and I feel. Performance doesn't matter, workload doesn't matter, skill doesn't matter, experience doesn't matter, impact to the customer doesn't matter - the only thing that matters is whether you stand in the way of their bonuses and pay.

    I can confirm that the consultant (McKinsey) was fired, I can't confirm that telling the execs what they didn't want to hear was the cause of their dismissal.

    Nevertheless, I've studied LEAN extensively and have been involved in it eyeballs deep and based on what I know of LEAN, this statement is probably true. Certainly, what is being passed for LEAN inside of IBM is not consistent with either the philosophies or processes of LEAN.

  • CNNMoney: A $100,000 lunch, minus the food. Celebrity chef Mario Batali and two partners are peddling laughter, libations and lunch - but only a select few will actually get to eat. By Jessica Dickler. Excerpts: I expected one of the world's most expensive meals to start with a few sublime cocktails and some mind-blowing appetizers prepared in exquisite style by celebrity chef Mario Batali. I flew to Las Vegas at Batali's invitation for a $100,000 lunch created by the world-famous chef and his long-time friends, bartender Tony Abou-Ganim and magician Billy Harris. The trio have teamed up to create an exclusive dining and entertainment service, dubbed Magic, Martinis & Mario, for - well - the kind of people who can afford a $100,000 lunch. [...]

    The venture is aimed at the corporate expense account set, which, after being rocked by corporate scandals and chastised for immoderate executive pay, is apparently ready to embrace conspicuous consumption again. (Editor's note: Apparently the "corporate expense account set" discussed here doesn't refer to 'normal' IBM employees who are subject to ridiculously low meal limits.) [...]

    Batali's rationale for a six-figure sit-down: "It's the opportunity cost of us having to set aside time to create the environment," Batali added. "And this is geared to a market where $100,000 isn't a lot of money." [...]

    The trio is already set to host a gathering for a select group of IBM executives later this week; Abou-Ganim is at work on a signature "big blue" cocktail. So if you're attending the computer giant's confab - or any of Magic, Martinis & Mario's other engagements - please do let me know how the food is.

  • Dice message board post: "Anybody else tired of the IBM SPAM?" by "ThisIsMe". Full excerpt: I am sure we have all seen it. The 5000 or so job offerings from IBM posted on about every site known to man updated every day etc..... Even worse is they way IBM posts. Here at Dice the sales category is crammed full of non-sales jobs posted by IBM, making the category pretty much useless. Same across the other popular sites.

    I know, just ignore them. Sure wish Dice as well as other sites would offer a way to allow ignoring SPAM from such outfits.

    I am tired of dealing with larger corporations with an HR department just finding something to do to justify their jobs when their is no position actually open. Rumor is that IBM has a hiring freeze and their HR is just collecting data for positions for when they can hire.

  • Dice message board post: "Re: Anybody else tired of the IBM SPAM?" by "bill56789". Full excerpt: I do not exactly agree with you. IBM is placing the ad as proof they have made an effort to hire here before they have a mass import of H-1b
  • Dice message board post: "Re: Anybody else tired of the IBM SPAM?" by " ThisIsMe". Full excerpt: I think you are saying that it is just a technicality that they have to go through before they start pulling in cheap labor from overseas? I am not familiar with work visas.

    Not sure about proof. They place the ads, thousands of job seekers in the US respond, IBM does nothing with the responses. Proves to me that IBM is a scam. Then again you are probably right and it is just some weak government policy that allows them to get away with such. At least we both agree that it is SPAM.

  • Dice message board post: "Re: Anybody else tired of the IBM SPAM?" by "softwarejanitor". Excerpt: One of IBMs largest US facilities is about 8 to 10 miles from my house... They have a large number of jobs posted and have been for months, many of which are marked "entry level" although they are asking for midlevel+ skills and/or education. I know a lot of people, myself included have applied for some of these positions and never so much as gotten an acknowledgement even though we were reasonably solid matches to the job descriptions. I guess you have to be a 110% match to even get a call back.

    I personally believe the H1B thesis. IBM will probably hire a lot of people in India, sure, but they won't be closing most of their major US facilities either. So I think they also want to replace a lot of people here in the US with cheaper H1Bs, and by advertising positions and not interviewing anyone they can claim there are no qualified US candidates.

  • Dice message board post: "Re: IBM Mass hiring" by "WiMoose". Full excerpt: My fiance and I just left IBM after several years there. They did layoffs in Nov as they do almost every year now and are looking to refill positions left vacant. They have a policy of forcing a 5% turnover.

    Management is ruthless and clueless beyond belief. They systematically devalue their workforce through absurdly random and highly political evaluations. The managers have no technical background and are unable to understand the technical details or business dynamics of the projects they supposedly oversee.

    There is a small exodus of people from our location. I guess the good news is that they are always looking to hire and it looks good on a resume, just don't plan on staying long. It isn't possible for morale to be lower.

    They are looking to outsource every job that can be, and a lot that can't be too ("local" phone operators, IT support). They are getting ready to make further cuts this year even as they hire new (young, cheap) people.

  • Dice message board post: "Re: can you take a few minutes to help preserve American jobs?" by "qualified-applicant". Excerpt: L-1 visas are another aspect of the this situation. The problems with L-1 are numerous, but one of the most significant is that there is no regulation as to how the visa is used. If a company decided to set up a hiring office overseas, for example, they could open a req in the US and then hire for it directly in a different country. All they would need to do at that point is to transfer the new employee to the US.

    The law states specifically that the employee is to have specialized knowledge of the company, but what does that mean? And how is it enforced? The answer is that it is not enforced. a Windows desktop support person could be deemed a specialist in some way -- maybe they have been set up with an account in the company's trouble ticket system. That would probably pass the test for specialized knowledge.

    There is no limit or regulation to the number of L-1 visas or the types of positions that are filled in the US. There is no reporting in place, so that the public can obtain the specifics of the visas granted -- employer names, which positions have been filled, job descriptions, locations, compensation, etc. All are deemed unfit for public consumption. Maybe the US government is protecting us from learning any facts that we don't need to know.

  • Yahoo! message board post: "Re: LEAN" by "hymeramen". Full excerpt: I've been working with a massive LEAN roll-out for 12+ accounts. IMHO LEAN=GOAT RODEO
    • ALL contractors are gone as of 5/1
    • Travel has been drastically cut
    • We have been told that LEAN will result in losses of jobs
    • Additional paperwork—EVERYTHING (no exceptions) must have a ticket before work can be done
    • There are 3-4 teams, whatever team you're on, you'll possibly work on all 12 accounts
    • Teams perform functions in degree of difficulty
    • There's a Request for Services RSF team, but it's not entirely certain what their role is. All tickets go to a dispatcher, the dispatcher actually assign the tickets to the various teams/members.

    What is being preached by our management...

    • This will result in a better work/life balance
    • Better cost management

    IMHO - this is micro-management at its worst.

  • Yahoo! message board post: "Re: LEAN" by "sandy12533". Full excerpt: This is exactly the point of LEAN. IBM has come to the conclusion that they are providing too much service to customers and is dropping the level of service. If a customer wants any of their problems fixed faster, they will have to pony up the additional costs in a new contract. The pity of it all is that a change that would take 5 minutes to implement, will now take several hours due to the additional paperwork and process it will have to flow thru under the new lean model.

    To hell with progress, keep adding layers of process to the mix, and lay off a few hundred folks in the meantime...welcome to lean phase 3. Just WAIT until you see phase 4 and 5...you ain't seen nothing yet..oh wait, you won't be able to see it because you'll be too busy filling out the paperwork in the unemployment line.

  • Yahoo! message board post: "Cooper vs. IBM & Second Choicers" by "madinpok". Full excerpt: To answer an earlier question, a first choicer is an employee who was within 5 years of being retirement eligible on July 1, 1999 and therefore had a choice of taking either the C-B plan or the old pension plan.

    Later, IBM expanded the group of employees who had a choice to include those who were at least age 40 and had 10 years of service. The people in this second group are the second choicers. One difference between first choicers and second choicers is that the first group got the old medical retiree medical plan, while the second group was forced into the FHA plan.

    For those that are complaining about the size of the settlement amount, there are several things you should realize.

    The bulk of the changes to the pension plan were legal which meant that the reductions in the pensions that they caused could not be challenged in the lawsuit.

    The lawsuit could only challenge what was illegal and that's where the age discrimination issues in the lawsuit came from.

    The PCF plan was found to contain age discrimination and the $350 million settlement attempts to address the damages. For most people, the damages are rather small, resulting in the small settlement amounts.

    Unfortunately, the Supreme Court went against the employees on the larger part of the lawsuit, the $1.4 billion that had to do with the Cash Balance plan.

    Kathi and the others deserve a lot of credit for taking on IBM. Although they could not restore our pensions to their original levels, the publicity generated by the lawsuit prevented (or delayed) many other corporations from jumping on the Cash Balance bandwagon and doing to their employees what IBM did to us. So the biggest beneficiaries of the IBM lawsuit may be the lucky employees of those other companies who did not end up in a C-B plan.

    In my opinion, the one to blame in all this is IBM for giving the employees a screw job, albeit a mostly legal one.

  • Yahoo! message board post: "Re: Cooper vs. IBM & Second Choicers" by "dr_bendoveru2". Full excerpt: Even though the settlement didn't amount to a lot of bucks it's certainly rewarding that Kathi Cooper and company held IBM's feet to the fire and kick-em in the balls...Thanks Kathi!

    I wish I could take it in a lump sum so I could go out and get really drunk one night and puke in a plastic bag and FedX it to Sam ! But at least this way I won't have to worry about the hang-over. Cheers!

  • Yahoo! message board post: "Received my Cooper Settlement" by "ibmmike2006". Full excerpt: First of all, Thanks to Kathie and Janet for the fight for all of us who received "something" verses "nothing" that was taken away from my and 150,000 other IBMers by the Pension Theft of the IBM Executives.

    I talked with my Financial Advisor to figure out, just how much money my "award" represents.

    Here are the numbers: Joint 50% survivor is $7.22 a month or about $1250 placed as a single lump sum annuity for my benefit. Upon my death, my spouse will get 50% or $3.61 a month for the remainder of her life.

    Had the Supreme Court appeal been successful on returning the $10 Billion that was stolen from the IBM DB Pension fund, figuring I was one of the 150,000, my share would have been $66,667 and if that amount had been placed in a lump sum joint life annuity with Joint 50% survivor, the amount would have been $386.57 a month and upon my death my spouse would receive $193.28 a month.

    Well, I would have liked to have received $386.57 instead of $7.22 but until the American People take back their country from the Corporations, Corporate Congress, and Corporate President, I am happy to get the $7.22.

    I am sure Randy McDonald and the band of thieves recognize that having to return $7.22 in lieu of paying $386.57 a month is worth the risk and cost of doing business plus all the political influence costs.

    I also looked at the IBM Proxy of 2007 where most of the pages were devoted to Sam's pay. The formula is not easy to compute but the average IBMer with good math skills should be able to do it. If Sam's final "pay" is $24 Million according to the proxy his monthly retirement will be $1,200,000 a month or $39,452 a day. I think I know where the $10 Billion went.

  • Yahoo! message board post: "First Choicer says THANKS Kathi" by "denniskmetz". Full excerpt: Kathi, I received an important looking document today with your name on it... and I just wanted to say thank you very much for all your efforts! It has been emotional for me, monitoring this group, reading the Settlement Agreement, and just wondering what the outcome would be. I can only imagine what your own experiences have been like.

    I do not think I can add much to the accolades I have seen others post on this board already, so let me just say with some levity that I will remember you fondly, as I am now able to afford a few extra cocktails each month because of your efforts. I will drink a toast to you (often), and to all the other IBMers I have grown to respect over the years.

    Thanks again, Dennis

  • Forbes: Is IBM McDonald's? By Martin T. Sosnoff. Excerpts: I salute IBM for one of the best annual reports I've read in years. There are 54 pages of management discussion. No pictures, but plenty of relevant tables, bar graphs and pie charts. IBM sells at a market multiple because investors only get excited about tech houses with top-line growth, which IBM lacks. The Street understands IBM is just putting on a brave face. [...]

    Beware of annuals with lots of glossy four-color photos. They're produced by public relations advisers and meant to obfuscate or gloss over operating issues that led to mediocre results. Mega-cap operators like Microsoft deliver a chief executive's essay and then tack on the annual 10K, their report to the Securities and Exchange Commission. Bill Gates doesn't have the time or patience to stroke shareholders. [...]

    Google earned $3 billion last year on its way to maybe a $6 billion earnings rate a year out. IBM, which has functioned for almost a hundred years, earned $9.4 billion in 2006. Revenues, at $91 billion, stagnated year-over-year.

    Google's revenues in 2006 shot up 75%. Its 10K was so fact-filled that it was used by the Goldman Sachs research team as the backbone of a very bullish report suggesting a $620-a-share valuation by year's end. I'll settle for $550, assuming some contraction in Google's price-earnings multiple below 30 times my 2008 earnings projection of $19 a share. [...]

    I take exception to how IBM is employing its free cash flow. Cash dividends amounted to just $1.7 billion, with over $8 billion going for share buybacks. This is the old Exxon Mobil trick. Share buybacks favor management by enhancing the value of their options.

  • Poughkeepsie Journal: IBM confirms local layoffs. By Craig Wolfe. Excerpts: IBM Corp. confirmed this afternoon that 56 people working at the two sites in Dutchess County were told today that their jobs are gone. Spokesman Jeff Couture in Burlington, Vt., said the job cuts affected 45 people at the Poughkeepsie site and 11 at East Fishkill. Others across the country are also involved, but he said he didn't have those numbers, other than seven at Burlington.

    But Lee Conrad, national organizer for the employee group, the Alliance@IBM, a union group, said members had sent in paperwork issued by IBM internally showing a major downsizing nationally. Conrad said 1,315 people lost their jobs today.

  • Burlington Free Press: IBM layoffs include 7 Essex Jct. jobs. By Leslie Wright. Excerpts: The move was part of a larger action that included more than 1,000 jobs across the country. Company spokesman Jeff Couture characterized the cuts in Essex Junction as part of periodic restructuring. "I would call this part of the normal, ongoing balancing of resources that happens at a company the size of IBM," Couture said.

    A union representative called the cuts part of an ongoing shift of jobs overseas. Across the country, 1,315 workers were cut, according to Lee Conrad, national coordinator for the Alliance@IBM. [...]

    All workers were part of the company's Integrated Technology Delivery organization, which is part of the Global Services division and provides services and support to IBM's outsourcing business operations such as data centers, Couture said.

    Conrad said the move, which was expected, comes as IBM continues to shift work overseas. "IBM has been very clear they will be eliminating jobs in the United States and shifting jobs to India and China and other low-cost countries," Conrad said.

  • Binghamton Press & Sun-Bulletin: IBM cutting 13 Endicott positions. Company slashes Global Services division. By George Spohr. Excerpts: IBM cut 13 positions from its Endicott site Tuesday, part of a larger wave of layoffs affecting its Global Services division. Jeff Couture, an IBM spokesman, said the number of layoffs company-wide was "relatively small." Elsewhere upstate, 45 jobs were cut at IBM's Poughkeepsie facility, 11 at its East Fishkill plant, and 15 in Westchester County. [...]

    Reports of the layoffs initially came from Alliance@IBM, a union group with offices in Endicott. The union's information was based on comments received from members of the Alliance, generally IBM employees or contractors. Layoffs -- totaling 1,315 nationally -- also occurred in Southbury, Conn.; Boulder, Colo.; Lexington, Ky.; and a number of employees around the country who work from their homes.

  • Rochester Post-Bulletin: Eight IBM workers in Rochester among 1,300 reportedly laid off. Excerpt: Some 1,300 workers in IBM Corp. services operations -- including eight employees in Rochester -- have received notices that their jobs are slated for elimination, according to a labor group.
  • WRAL (Raleigh, NC): More Blue Times at IBM – Another 1,315 Layoffs in ‘Workforce rebalancing’. By Rick Smith. Excerpts: The layoff broom is sweeping through the ranks of employees and contractors at IBM again. More than 1,300 employees – largely in services operations based in the U.S. – were notified on Tuesday that their jobs are over. Also affected were an unknown number of contractors. [...]

    IBM typically doesn’t announce layoff news, but a spokesperson for Big Blue told The Wall Street Journal and another New York newspaper that the reductions should not come as a surprise. In its last quarterly earnings report, he noted that IBM would be “putting in place a series of actions to address our U.S. cost base.” [...]

    The layoffs at IBM come soon after Lenovo announced another big reduction of 300 or so of former IBMers from its ranks. Those folks transitioned to Lenovo when IBM sold off its PC division two years ago.

  • Denver Post: IBM to cut 150 jobs in Colorado. By Kimberly S. Johnson. Excerpt: IBM said it would lay off 150 people in Boulder and metro Denver over the next 30 days as the company shifts resources to meet its customers' changing needs. The employees are part of the company's information technology delivery organization, IBM spokesman Lon Levitan said Tuesday.
  • Boulder Daily Camera: IBM to cut 100 Boulder jobs. Union organization says more cuts coming. By Alicia Wallace. Excerpts: Those cuts shouldn't be the last, said Lee Conrad, national coordinator for the Alliance@IBM, a union organization affiliated with the Communication Workers of America that is trying to organize IBM workers. Conrad said his organization has received word that IBM may cut 8,000 to 10,000 U.S. jobs this year.

    "Almost definitely" there will be more cuts, Conrad said. "Our sources have been pretty much right on." Offshoring, he said, appears to be the driver of the job losses.

  • Reuters: IBM to cut 1,315 jobs in U.S. Excerpt: "We're putting in place a series of actions to address our U.S. cost base, including a basic focus on resource and cost management disciplines and rebalancing of resources as we execute our global resource strategy," Chief Financial Officer Mark Loughridge said on a conference call with analysts on April 17, according to a transcript of the call.
  • Waterbury Republican-American: IBM cutbacks include 45 jobs in Southbury. More layoffs by company expected. By Marc Silvestrini. Excerpts: IBM Corp. has cut 1,315 service-related jobs across the United States, including 45 in Southbury, and more cuts are expected to be announced later this week, a spokesman for a labor group said Tuesday. The company Tuesday confirmed 45 workers at IBM's facility at 150 Kettletown Road in Southbury were among those who lost their jobs. [...]

    Five workers were laid off at IBM's Hartford facility, which employs about 500 people, McWhorter said. Lee Conrad, national organizer for the Alliance@IBM, said data submitted by alliance members suggests more layoffs are coming and Southbury is likely to be among the sites "hit the hardest." [...]

    Conrad said he expects IBM to shed between 8,000 and 10,000 jobs in the United States between now and midsummer. He said the Southbury facility could lose as much as 30 percent of its work force. [...]

    "Basically, we've been seeing more and more of our work go to India," said Jim Mangi, a support technician for IBM and the alliance's national secretary. Mangi said he had no knowledge of the number of job cuts the company plans, either in Southbury or nationally, but that his communications with other alliance members indicate that Conrad's estimates are "a good bet."

  • Associated Press, courtesy of Forbes: IBM Executive VP Exercises Options. Excerpts: An executive vice president of International Business Machines Corp. exercised options for 100,000 shares of common stock, according to a Securities and Exchange Commission filing.

    In a Form 4 filed with the SEC Wednesday, Nicholas M. Donofrio reported he exercised the shares Tuesday for $51.16 apiece and then sold 98,046 of them the same day for $102.06 to $102.58 apiece

  • Business Standard (India): IBM to open 4th facility in Chennai. By Ravi Menon. Excerpts: International Business Machines (IBM) is set to open its next major facility in Chennai. The approximately 3.75-lakh square feet centre, currently under construction at the DLF IT park at Manapakkam in Chennai, will be IBM’s fourth facility in Chennai and is expected to be operational by the end of June this year. The facility, which will function as IBM’s global services delivery centre, will provide application development and delivery services for the Armonk, New York-headquartered technology giant’s domestic and international clients out of Chennai.

    Industry sources added that IBM’s employee headcount at the new centre could well touch 1,700 to 2,000 employees by the middle of calendar 2009. IBM has been keen to scale up its existing application delivery capabilities out of Chennai through a fourth centre. The new application delivery facility will have the capacity to house 3,000 employees. IBM as well as long-term business partner TCS are presently undertaking fitout activity at the DLF IT Park premises where their new leased facilities will come up.

  • New York Times: Another Economic Disconnect. By Paul Krugman. Excerpts: Last fall Edward Lazear, the Bush administration’s top economist, explained that what’s good for corporations is good for America. “Profits,” he declared, “provide the incentive for physical capital investment, and physical capital growth contributes to productivity growth. Thus profits are important not only for investors but also for the workers who benefit from the growth in productivity.”

    In other words, ask not for whom the closing bell tolls; it tolls for thee.

    Unfortunately, these days none of what Mr. Lazear said seems to be true. In the Bush years high profits haven’t led to high investment, and rising productivity hasn’t led to rising wages.

    The second of those two disconnects has gotten a lot of attention because of its political consequences. The administration and its allies whine that they aren’t getting credit for a great economy, but because wages have been stagnant — the median worker’s earnings, adjusted for inflation, haven’t gone up at all since the current economic expansion began in 2001 — the economy feels anything but great to most Americans. [...]

    Since President Bush took office, the combination of rising productivity and stagnant wages — workers are producing more, but they aren’t getting paid more — has led to a veritable profit gusher, with corporate profits more than doubling since 2000. Last year, profits as a share of national income were at the highest level ever recorded. [...]

    Instead of investing in physical capital, many companies are using profits to buy back their own stock. And cynics suggest that the purpose of these buybacks is to produce a temporary rise in stock prices that increases the value of executives’ stock options, even if it’s against the long-term interests of investors.

    It’s not a far-fetched idea. Researchers at the Federal Reserve have found evidence that company decisions about stock buybacks are strongly influenced by “agency conflicts,” a genteel term for self-dealing by corporate insiders. In the 1990s that kind of self-dealing often led to excessive investment, which at least left a tangible legacy behind. But today the self-interest of management may be standing in the way of productive investment. [...]

    In any case, next time someone tells you that any action that might reduce corporate profits a bit — like actually enforcing health and safety regulations or making it easier for workers to organize — will reduce business investment, bear in mind that today’s record profits aren’t being invested. Instead, they’re being used to enrich executives and a few lucky stock owners.

  • ComputerWorld: Cheating on IT Exams May Cast Doubt on Their Value. Thieves, 'gunmen' look to profit from stolen technology certification tests. Excerpt: The FAQ page of a China-based Web site promises to help its customers get IT certifications “with your least effort.” On the right side of the page, a shaded box makes an even more direct pitch: “Order our gunman service and you will pass. Obtain your certications [sic] at home without testing by yourself.”

    The site and others like it are examples of an IT certification exam piracy market that is operating in plain sight. People looking to cheat on exams can obtain copies of them or simply offshore the work to so-called gunmen, who operate mostly in Asia and will take tests for clients at a cost of up to several thousand dollars.

  • The American Prospect: Double Decoupling. The rest of the world's major economies no longer depend on America's. Neither do America's own largest corporations. By Robert B. Reich. Full excerpt: I'm spending my spare time these days debating supply-siders who are convinced that the record-breaking Dow proves the correctness of the Bush tax cuts.

    Yes, the Dow did reach a record high last week. But the Commerce Department also reported that economic growth slowed to its weakest pace in four years. How can investors do so well while the real economy is doing so poorly? My supply-side friends don't have an answer, but I do.

    It's because of two great decouplings that have occurred in recent years. First, the rest of the worlds' major economies have decoupled from the United States economy. China, India, Japan, and Europe are now such large markets they can grow briskly even as America slows.

    Second, America's largest corporations have decoupled from the United States. Their overseas subsidiaries are booming even as their American operations stagnate. General Electric expects more than half its revenue this year to come from outside the United States for the first time. More than half of Boeing's new orders are from overseas. Ford is struggling in America but doing well in Europe.

    In other words, the president's supply-side tax cuts are great for America's global investors, who have been investing their extra money around the world -- either in foreign companies or in global American-based ones.

    But little or nothing is trickling down to average working Americans. Half of U.S. households do own some shares of stock, usually through their IRAs or 401-Ks. But the vast majority own less than $5,000 worth. Their equity is in their homes, whose values have slumped. They're paying far more for health insurance and fuel. And their wages haven't kept up.

    Bottom line: The Bush tax cuts have delivered for Wall Street but done zilch for America's Main Streets.

  • Worker's World: How airline workers' savings were hijacked by ESOPs. By Michelle Quintus. Excerpts: In Employee Stock Ownership Plans (ESOPs), there are two winners: the banks and the corporations. As employees facing layoffs, our goals of saving our jobs and investing in our futures may lead us to accept all kinds of schemes to help “save the company,” and we may end up achieving neither goal.

    Take United Airlines, for example. In July 1994, the Air Line Pilots Association (ALPA), the International Association of Machinists (IAM), and non-union employees at United “purchased” 55 percent of the company in the largest ESOP in history. They gave the company concessions valued at $5 billion over six years, including wage cuts of 12 to 15 percent. The stock itself could not be sold, and workers who quit prior to retirement paid heavy penalties and taxes.

    And what did United’s “employee-owners” receive for these concessions? In the late 1990s, some workers received a few dividend payouts, ranging from a few pennies to a few hundred dollars. But what’s worse, the workers did not gain a majority voice in the company decision-making for their so-called majority ownership from 1994 to 2000

  • Daily Report: Delta bankruptcy deal nice for retired pilots. If plan holds, it’s fair skies ahead as pilots may recover most of their retirement income. By Andy Peters. Excerpts: Compares with some pilots whose airlines went into bankruptcy protection, retired Delta Air Lines Inc. pilots might feel like they’re sitting pretty. Delta emerged on Monday from Chapter 11 protection, where it had spent the past 19 months. Terms of the bankruptcy deal call for Delta to pay retired pilots an estimated 65 cents for every dollar owed by their supplemental retirement plan, and an estimated 85 cents for a qualified plan, said Miller & Martin partner G. Dean Booth.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Kaiser Network: Physician Survey Ranks Health Insurer Reimbursement Practices. Excerpt: UnitedHealth was ranked last among the seven largest national health insurers in an Athena health survey of 8,500 doctors examining how quickly and accurately insurers reimburse for physician services, the Wall Street Journal reports. UnitedHealth took an average of 38.3 days to reimburse doctors for services. The company said 95% of claims are paid within 10 days and are in accordance with state "prompt-pay" laws.
New on the Alliance@IBM Site:
  • IBM Shareholder Meeting; April 24, 2007; Knoxville, TN. “Offshoring Proposal Speech by Mike Saville – Proponent” Excerpts: My name is Mike Saville and I am from Riverton , Utah . In Gerstner's book “Elephants” he wrote that people who show up at the annual IBM shareholder meeting are “Social Engineers, Gad Flys, or Disgruntled Employees”. Well, I might fit all those categories but I prefer to be known as a retired IBMer after 32 years who helped IBM achieve the “Most Admired and Profitable Company status during the Eighties” and a “LONG TERM loyal Shareholder, having held my IBM stock since 1968.”

    “Offshoring” or “Globalization” is “short term” cheap labor profit chasing. [...]

    In the last five years, the USA employee headcount has remained flat at 127,000 while IBM India has grown to 55,000 with 100 Thousand employees projected in India by 2010 Sam, last year you announced $6 Billion would be spent to expand in India , the same as the total IBM research and Development in the US annually. [...]

    Where is IBM going and what are the Long term effects on the USA of Offshoring? In 1981, a McKinsey sponsored book (Gerstner was a McKinsey employee) written by Tom Peters entitled Excellence that complimented IBM as being the most profitable and most admired Company. Shortly thereafter, IBM fell on hard times and Gerstner came to IBM to save it.

    Recently, Fortune magazine ranked Companies as America’s most admired in eight categories that included Innovation, People Management, Social Responsibility, Use of Corporate Assets, Quality of Management, Financial Soundness, Long Term Investment, and Quality of products and service. They listed the Ten Best and Ten worst in each category.

    If IBM’s success is hinging on Innovation for the last four years, where is the measured success? Why is it IBM did not make the Top Ten Most Admired in any Fortune magazine’s categories?

    Some of the questions I have is “With the explosion of hiring in India, China, Brazil , Russia and others internationally” when is the payoff coming to the Shareholders?

    I reviewed IBM’s stock performance at CBS Market Watch dot com and on page 119 of the Annual Report, and compared to the last four years of 65% growth of the S&P 500 and 55% growth of the Dow, IBM stock performance during the same period was only 12% growth.

    The profits of “Offshoring” have not translated into shareholder value. [...]

    Robert Gomory – Retired IBM Senior VP and President of the Alfred P Sloan Foundation, said in an article in The Nation that “The US approach to Globalization must be transformed to defend the national interest. If nothing changes in how Globalization works – Americans will be increasingly exposed to downward pressures on incomes and living standards.

    Gomory wants to re-create an understanding of the corporation’s obligations to society, the social perspective that flourished for a time in the last century but is now nearly extinct. The old idea was that the corporation was a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product.

    “The attitude was the attitude I grew up on in IBM,” Gomory explains. “That the way we thought—good for the country, good for the people, good for the shareholders—and I hope we will get back to it…. We should measure corporations by their impact on all their constituencies.” [...]

    I will conclude with comments by a fellow named Bob McDonald entitled “Crime of the Century”. He points out that treating employees poorly and taking pension dollars from them is a violation of long term commitments. Congratulations on the recent win in the Cooper case where the employees saw their pensions shrink by 50% and $10 Billion removed from the Pension fund

    “There is a firm belief that employees are the critical factor in a company’s success or failure. When employees have the ability to add value to an organization they will be encouraged to do so when they are allowed to share in the value created."

    The promise of a secure retirement is one way for a company to share the value of success created by an employee’s loyalty and hard work. Promises made to employees but reneged on for short-term benefit shows disrespect for those who are critical to a company’s success. When you reduce or eliminate the employee’s incentive to see the company succeed, the seeds for long-term failure have been planted.

  • From the Job Cuts Status & Comments page (Note: There were a massive number of posts to this page during the last week. The following is a sampling of the large list of posts received by the Alliance@IBM.)
    • Comment 04/29/07: I work in IGS in Canada, and just had our "LEAN" presentation on Thursday. It was not a good news story. 25% of us, and 40% of our support group will be put on the "flexi-bench" for the pilot project of Lean starting Monday. They say if at the end of the pilot project, they find they don't need you, you will be redeployed. I can't imagine to where if all other departments are "leaning" also. We run very lean already, and I think they're going to see a significant impact on customer service. It's a sad time here, and I think IBM is making a big mistake. Gee...I wonder is they're going Lean in South America or India? Hmmm...I suspect not. -Another number at IBM-
    • Comment 04/29/07: May 1st is the day at east fishkill.across the board job layoff.everyone was ranked and management told to make a layoff list.all departments affected.global services will be hit hard but its across the board layoff.good luck everyone. -Anonymous-
    • Comment 04/29/07: IBM is all about fear. They hire people who will respond to threats and scare tactics as motivation. After my second to last year when they gave me some BS line about not enough money for raises, I woke up and spent a year calling in sick and relaxing, it was great. So what if they outsource or do lean or whatever, Just sell your stock when its high and work on getting out. I do feel bad for those who invested their lives and are now getting screwed in every way possible. Be strong. When one door closes another opens. God Bless -Anonymous-
    • Comment 04/30/07: Here is my opinion. IBM did a risk analysis and found out that implementing LEAN incorrectly would give them the lowered USA job pool they want anyway. Blaming a named program takes the stigma and some of the responsibility out. Execs can point to LEAN as the culprit, then walk away. This is why we are seeing LEAN DONE WRONG. It is on purpose. -readingbetweenthelines-
    • Comment 04/30/07: I "retired" a few months ago and drop by once in awhile to see what's cooking in the company that I once felt was the best in the world. I see it accelerating for the worse. After spending the last several years as a midlevel manager fighting for "my" employees I just couldn't take it anymore - "they" had worn me down. So with a heavy heart I left and my job was immediately filled by someone who would just roll over and do senior mgm'ts bidding. As I read about this "new" LEAN program I have to chuckle -- every one of these ideas had been tried before back when employees mattered and layoffs were not on the table. Just a few ---
      • JIT - Just In Time
      • Quality Circles
      • MDQ
      • Preferred suppliers
      • Team Based approach
      • Automation
      • All work is process
      • Team One
      • Quality is Free
      • Baldridge
      • Six Sigma
      But IBM never would stick it out to make it really work. Remember MDQ? It wasn't a program, it was a "NEW way of life in IBM that would never die." It died shortly after that comment when Akers left. I started with IBM when it was making the transition from vacuum tubes to transistors - SLT. I have seen us go from "Respect for the Individual" to the bogus values they have today. Although I probably shouldn't care anymore, all I can say is - It used to be the best and I am sorry many of you will NEVER experience the company it once was and know the "family" IBM used to personify. -Anonymous-
    • Comment 04/30/07: Don't confuse the general business definition of LEAN with IBM's version. IBM takes a defined business term and then redefines it to mean something that could be totally different. Most corporations do this to some extent, but IBM does it to the extreme. The clever use of semantics allows them to justify whatever that are doing by claiming it's being done by all of the competition and they have no choice and must also do it to survive. -Anonymous-
    • Comment 04/30/07: I was a team lead for a commercial account in Southbury. My manager removed me from the account a couple of weeks ago. ALL BECAUSE OF THIS LEAN CRAP. I just purchased a house and have no clue what my future is with IBM. I might move back home with my parents. Good luck everyone. -Anonymous-
    • Comment 04/30/07: I had to let go a couple of people today. I feel really bad but upper management is making the call. I am only a little first line manager. -NG_MAN-
    • Comment 05/1/07: Well, I was given the old "30 days to find a job" notice this morning. My account is being LEANED as we speak and so far the results aren't spectacular. My boss (a really good guy) probably thought I'm crazy because I started laughing about it. I suddenly feel like I'm free after all these years of working my butt off on 3 AM callouts. I've been in IT since 1974 and enough is enough. I've never been so consistently lied to by an employer as I have by IBM. Geez, what a relief. -Out the Door-
    • Comment 05/1/07: Employees who maintain IBM internal and external web sites being let go. GWA Tech Support. All contractors going. -UNION-
    • Comment 05/1/07: This is the big one everyone was worrying about.. ITD.. PM 8 years PBC's of 1's and 2's..Typical package 6 month - 1 week med 6 months Cobra afterwards. Nice to not have to stress anymore. Sacrificed my time, family, vacations for what? This? Good riddance IBM.. Sam is on the race to the bottom right now -Screwed by sam-
    • Comment 05/1/07: This is sad, cuts from every level of the company to inflate the pocketbooks of the investors, and grow india. The days of employee loyalty left with Lou. IBM has trained all of its employees to give them our hearts, souls, and lives only to be thrown away like yesterdays garbage. Palmisano is truly one of the greatest disasters to befall IBM. -UP_URS_IBM-
    • Comment 05/1/07: RE: http://money.cnn.com/2007/05/01/lifestyle/luxury_lunch/index.htm?postversion=2007050110 People losing jobs so our CEO can eat a $100,000 lunch the whole corporate structure can go f*** themselves. -IBM CAN F*** THEMSELVES-
    • Comment 05/1/07: Two of us regulars in Southbury and one contractor out the door. At least we got 30 days and some kind of severance. The contractor was the best guy I've ever seen and he's out the door with nothing today. I will be SO HAPPY when i find a job working some place else. I can't wait for that day to come soon. There is no way this team can manage so much with just a few people, completely impossible. Big Blew you really Blew it, this will be your demise, I guarantee it. IBM will be down the drain soon because of greedy executives. -Done-
    • Comment 05/1/07: Devastating cuts on tap for the Tivoli Development group in Tucson. Management is targeted as well. Good Luck ! -Anonymous-
    • Comment 05/1/07: Raleigh, San Jose and other quasi-development sites get my visit late this week early next. Lou Shadow was right. Those of his and Sam's militia get the 100K luncheons and the rest get to fight for crumbs for their families. You didn't believe in the evil that has always lurked in Armonk. Now you will pay the price for being fools and not unionizing. Even more horrors to come, despite a few in the know who are trying to save the little that is left by actually bringing the whole company down in one large, huge scandal. My condolences to those victims of today's horrendous actions. Don't worry, from today on your future will be brighter. You should pray for those brand blinded and still in the company. IBM is no different than Sodom and Gomorrah. Working in IBM is being like on a voyage of the damned! -The Grim Reaper-
    • Comment 05/1/07: Dallas Data Center was cut 30% per shift, they wanted 50%. These are not contractors. Total of 12 people for now. -Tex-
    • Comment 05/1/07: May 1, 2007. IBM fires employees in Chicago. 30 days and out. Tape/ Print operations area and Tech support. (5) employees known so far. -Anonymous-
    • Comment 05/1/07: When does SJP get cut? From a shareholder perspective, IBM has performed less than the S&P over his time as CEO. Did the board give him 4 years of "needs to improve" and no bonus for his PBC rating? Some talking heads are claiming that IBM would be up more than another $15/share on announcement of Sam's departure. Anyone up for a shareholder vote? -Shareholder-
    • Comment 05/1/07: Today was like sheep being led to the slaughter, one by one. I don't know who is in the worst position. The ones who have been layed off, or the ones who have to stay and mop up the mess with a broom with one strand on it. -joey-
    • Comment 05/1/07: 33% CUTS across our dept in IGS today. This is the wonderful benefits IBM is reaping with LEAN. FOLKS: We are NOT finished with this. There is LEAN 4 and 5 yet to come. IF you think you've escaped the ax this time, YOU WILL get it in the following waves. IBM's goals are to offshore 75% of the technical support. NO Technical job is safe, and if you think this is just hearsay, stay in your current job and find out for yourself what the future holds! -first-line-
    • Comment 05/1/07: Three out of 11 operators were cut from the Pearson account today. Termination date is 5/31. The rest will have to train their replacements from India and they will be terminated by 8/31. -Anonymous-
    • Comment 05/1/07: Some major cuts occurring and after all the LEAN layoffs we will be reorg'd in June and most of us will be outsourced to Brazil soon after. I feel awful for the teammates of mine (INTEL and Unix/AIX) who were LEANED. I'm not so sure who got the better deal though, oh Yeah GREEDY SAM!!!! What a crappy place to work....IBM - Irritable Bowel Movement. It just stinks in here!!!! -SoiledMyPants-
    • Comment 05/1/07: My first memory of Alliance@IBM's efforts in trying to organize the USA as a Union was about six years ago. I remember being so pleased at the prospect that the largest most powerful Union in this country had actually invited IBM to join them. What I could not believe was the paralyzing fear I saw across the faces of most IBM employees at even the slightest talk of a Union. Most employees were petrified to even accept a Union flier that was being handed out to the general public.

      As a descendent of one of the original co-founders of the CWA http://en.wikipedia.org/wiki/Communications_Workers_of_America, back in the 1940's, I can only say, it's too little too late, not even the largest Union can help us now.....sorry wish this story had a different ending, but the truth of the matter is no one is safe. Help the next 'huge company' that lays off their workers, write to your lawmakers, President, Senators, etc.....(or better yet Oprah).......God bless us all -Union Brat-

    • Comment 05/1/07: I was given my 30-days notice today, my coworker was given 1 day notice yesterday (contractor), and I'm know at least 5 1st-line managers that were also on the list. Our team has been downsized by about 50% from a few months ago. -Boulder SSO-
    • Comment 05/2/07: With regard to the question: "how are the systems going to be operated in the future? Will it be done remotely from India?" The answer is yes, that is the plan. There is a software tool that was called "PARASITE" (it has been renamed now and I do not know the new name) that is being loaded on the CICS (Windows) and UNIX servers at the outsourced accounts. This tool allows for a "standardized" remote access method to the servers from remote locations - e.g. India. -Anonymous-
    • Comment 05/2/07: Uh Guys, I am on the LEAN team, this wasn't LEAN. LEAN had nothing to do with this one. The higher ups did not like the 1Q numbers so they basically took the same numbers LEAN was supposed to make and started whacking from there. The people who were RA'd were decided way up high in the ranks without your direct manager input. This way your manager could not do anything to save your job. At the same time notice how the IBM stock is going up, this is because IBM is buying back stock like crazy to "artificially inflate the numbers" so they look better. Unfortunately, LEAN is still expected to make their 30% target numbers. Sorry all, rough times are still ahead. -Anonymous-
    • Comment 05/2/07: I retired from IBM in Jan of '98 and have never been sorry for it. I worked for IBM when there was at least a little respect for the individual and management could at least have a little honesty some of the time. This company will continue to treat it's employees like so much dirt as long as the employees let them. If anyone should be let go, it should be the senior management team along with Sam.

      Seems like the only way a profit can be made is sell something off at the end of the year or ship more jobs overseas. That is really inventive! I wonder just where IBM stands on the list of companies to work for? You sure don't hear anything about that anymore.

      If you are notified that your job is to be cut and you have to train your replacement, walk out. 6 months pay and a little benefit isn't worth it. Be looking for a different and better job now, not later. Nobody needs IBM. As far as all of these jobs going overseas, what goes around, comes around. Those people will not work for peanuts either. Hasn't IBM already moved operations from countries because of increased wage demands (China)? I sincerely wish the remaining employees good luck. Remember, the only ones that can change IBM is you. -Roch_Retrd-

    • Comment 05/2/07: I work in IGS and for years, I've felt like our profit margin is so low due to our extremely poor contract negotiation skills, compared to the customer and hired 3rd party skills that negotiate the deal on the customer's side. The accounts I'm involved in strike the worst deals I've ever seen and ITD simply gets the hammer for being "too expensive"... I say it's our deals that are "too cheap" and that the people's pay incentives need to be tied to the profitability to the contract... Until that's done, we're wasting our time... -It's.the.engagements@endicottalliance.org-
    • Comment 05/2/07: Just to restate what was said earlier -- please join Alliance@IBM as a dues paying member. Complaining here isn't enough. We need to be working together to get the word out, and that costs money. It's all of $10 a month. That can easily be saved by not eating in the overpriced cafeterias IBM provides for our "benefit". -IBMer's Dozen-
    • Comment 05/2/07: I am a first line manager and it's hard to have to let people go. I feel bad for all of those that IBM let go. I walk my dog every night thinking about this. I wish you all the best of luck. Scope is Success -NG_MAN-
    • Comment 05/2/07: For those who were RA'ed, don't forget to spend all your Flexible spending money (the amount your allocated for the *entire* year) before you go: glasses, dental work, etc... -Anonymous-
    • Comment 05/2/07: As long as the IBM stock price continues to climb more USA employees will lose there jobs. How do you think IBM can pay for the $100,000 lunches they signed up for? When are you people going to stand together and try to do something about it? So you think collective action can't work? Then see ya on the unemployment line. -Union_Man_4ever-
    • Comment 05/2/07: I am so sorry to read about the recent layoffs. I was laid off in June 2005 after 23 years with IBM so I can really empathize with how people are feeling. I just want to say that while it's horrible now and very unfair, there is life after IBM. I am a PM in the healthcare industry, making more money, have more paid time off, and work for a company that reminds me of IBM 20 years ago when they cared about people. Hang in there and keep the faith. Also - I am a card carrying union member and check this website for status of the pension lawsuits....IBM swiped mine when they moved us all to the cash balance pension. -Former SWG PM-
    • Comment 05/3/07: I was an FA in IBM Internal and just had to quit. From where I sat it did not seem possible for my org to make its numbers unless there were some very business-disabling cutting... but that is just my humble opinion. The thought of being in a position to facilitate that kind of carnage and then be left to clean it up (with one straw on our broom as someone else has said) was too much for me morally and psychologically. What I want to know is if IBM does try to sell ITD, why would anyone want to buy it? The buyer would be buying the people who are providing the services and IBM has already announced through its actions that these people are too expensive. Trouble is, the ones worth the extra expense will have already left by the time any sale goes through and a buyer of ITD will be left with a lot of stressed out overworked employees and a lot of customers angry about continual breakage. -BTDT-
    • Comment 05/4/07: To All of Us that only have till the "end of May". Remember to go out and give out ALL of your "Thanks Awards" you have left to others that are having to leave..... Or - if you can't give them to people leaving, Give them to the "poor souls" that will be left to do your job/s. It will be the only "gratitude" that they'll be receiving this year... 1,315 people being forced out... times 12 awards that can be given for 2007.... times $ 20.00 per cost of award... equals approximately $ 316K.. it will cost IBM... -I'veBeenMugged-
    • Comment 05/4/07: I wonder how you would feel to know that the LEAN initiative is paying for people that live more than 20 miles from the Boulder facility to stay at the Radisson. I wonder how this is considered saving money? I would think that the money spent on such luxuries would pay to help keep one or two people in a job. Also, I have heard that there is another huge cut coming that may involve as many as 350 people in Boulder. Looks like we are all on the block. Maybe the government needs to step in and investigate the unfair practices that are running rampant in IBM at the moment? -Anonymous-
    • Comment 05/4/07: Friend of mine just got screwed in RTP. It seems that in the past formally announcing your intent to retire and a date as to when you retired was a way to avoid or delay the layoff. This is still true. However, HR has put a nasty twist. If you announce formally a date to retire, you are now committed to retire on that date unless you get a written dispensation from management to Fidelity that they are OK with your change. Folks, now according to my management chain, that will be almost an impossibility. Once you push the button, you are committed. No more games allowed. One more loophole closed. Be careful you don't get caught in that trap unless you are ready for it. -Retirement Intent Aint Good Enough-
    • Comment 05/4/07: To my dear fellow employees who happened to be subcontractors and are ALL gone, I sincerely regret not being able to say good-bye to each of my great friends. We spent more time together than I do with my family. I didn't believe the rumors because I knew how important you were, how hard you worked, and how a few of you sincerely hoped and tried to become regulars because you were happy to work for IBM. I felt sick all week and pretended to do my job. Nothing is getting done. Know that your loss is a great loss that this terrible company will never recover from. It's pure chaos down here in the bowels of the enterprise. I did write letters to my former company, the one that outsourced me here, to every officer, begging to take us back! God bless you - you will all do well because you are the best. Your friend... my thoughts are with you. -what do i do-
    • Comment 05/4/07: If you think that HQ is not reading these posts, you are fooling yourself. The rumored $100,000 lunch is the meeting with foreign investors interested in pieces of the blue pie. The core is rotten so I suggest you find a new career and get your dignity back. I did 5 years ago. Got a new job, walked in at 4:30 and quit with no notice. FTAH. - Ben Dover-
    • Comment 05/4/07: Confirmed over 600 got the boot from IBM GS in Canada on 3rd May...more to come unfortunately. No one is getting hired, we all have double the workload, pager pay is cut to a ridiculous amount, contractors (the surviving ones) have to take pay cuts or have to leave, people don't get paid for o.t, IBM are getting paid for 7 FTE's for a new client and we are staffed with 3...great place to be a slave. -Anonymous-
    • Comment 05/5/07: After looking for some time I found the right job for more money, cheaper benefits and a much better 401K plan. I left last August after 17 years. I was really reluctant initially, but so happy I'm gone. I feel for all you guys and if you can, leave. There is life after IBM. I was second generation and had seen IBM in its glory days. I can't even believe this is the same company. In my opinion, IBM has been in a death spiral since Sam took over. It's a matter of time before he walks with a bunch of cash and the US employees have no jobs. If you'll close to your pensions, hang in there, but if you're not, do whatever you can to get out. I actually enjoy going to work everyday now. That in itself was worth leaving Blue for. -HappyToBeAnEX-IBMerNow-
  • From the General Visitor's Comment page:
    • Comment 04/23/07: > So, our results were good. But we should have done better.< Dear Sam, I'm glad you use the word "we". This is a team effort to get IBM back on the right track. Let's make a joint effort and turn in our bonuses given this year to help the company. I'll return my $547 variable bonus and would like to see you do the same with your $5,800,000 bonus. -Anonymous-
    • Comment 04/24/07: If IBM could get away with it, they would endorse bringing back a system of slavery that would benefit their "numbers" by virtually eliminating labor costs. The U.S. government allows IBM to push in this direction, and IBM would love to find a government that would allow them to take it to the slavery extreme against helpless people. Unfortunately, elitist IBM executives\' definition of "people" only includes themselves. -Anonymous-
    • Comment 05/1/07: Can you believe the latest arrogance.....on CNN Money page today, an article about a $100,000 lunch. The kicker....bunch of IBM execs are the first to sign up! http://money.cnn.com/2007/05/01/lifestyle/luxury_lunch/index.htm?postversion=2007050110 -Anonymous-
    • Comment 05/1/07: $100,000 lunch and my manager can't get approval to buy pizza for 10 staff for a lunch meeting. Nice priorities. -another ibm-
    • Comment 05/3/07: Here in Rochester they have decided to start shutting the lights off early to save $. That's fine, I guess I don't mind working in the dark when I'm working late, but maybe the execs could consider cutting back on the $100k lunches instead?
    • Comment 05/4/07: IGS is just plain unethical. The majority of those of us < Band 9 are working our butts off to make up for IGS cheating their customers by grossly understaffing. IGS prices based on a headcount (and those salary figures are inflated) and then only deploys half the staff required. Transitions are underfunded so new projects are broken to start with. Then, with people moving around and process changing every other day, my head is spinning. I took the McKinsey survey and it was lame - only 1/2-dozen very general questions. I was afraid to answer it honestly. Right before Lean and the last lay-offs, IGS did fire several big-time execs in different industries. Maybe those guys had a heart and spoke up and will speak up! This company needs to be investigated for fraud for cheating its customers. I don't know what the next few months will be like with half the staff but I will no longer work overtime. I may pretend to but I am not GOING TO DO IT ANYMORE! -the solution-
    • Comment 05/5/07: I have 14 yrs 4months with IBM. I am losing over $44,052 in my Future Health Account because of the 15 yrs requirement to get it. Is there anyone else having this problem and did anyone get the contents of their FHA without having the 15 yrs. I was selected for the permanent layoff to end my employment 31 May 2007. I am 63 yrs old. -Anonymous
  • Pension Comments page
  • Raise and Salary Comments
    • Comment 04/29/07: Salary = 61000.00; Band Level = 7; Job Title = Sales Specialist; Years Service = 5; Hours/Week = 60; Div Name = STG; Location = Markham Ontario; Message = Quick hello from up north. From the looks of all the posts we're not experiencing the job cuts as much as the US is. What we are seeing is a ton of employees leaving the company. We get weekly calls from SUN and HP offering nearly double what we currently make. We've lost 16 employees from the Canadian STG division in the past 9 months. When will upper management recognize there's a pay problem?? -Canadian IBMer-
    • Comment 04/29/07: Salary = 60000; Band Level = 6; Job Title = Software Engineer; Years Service = 0; Hours/Week = 60; Div Name = SWG; Message = New college hire. -pw-
    • Comment 04/29/07: Salary = 58500; Band Level = 7; Job Title = Systems management; Years Service = 8; Hours/Week = 50; Div Name = ITD; Location = NY; Message = trying to find a job outside of IBM in very high stress position right now, on-call of off shift projects don't help when I'm trying to maintain a normal sleep schedule. At this point assuming the severance package hasn't change (1 week for ever six months work) getting laid off would be such a bad thing -Anonymous-
    • Comment 04/29/07: Salary = 90K; Band Level = 8; Job Title = Advisory Software Engineer; Years Service = 6; Hours/Week = 40-50; Message = 2001 starting salary: 55K, 2007 salary: 90K. There's still good people at IBM, but they are human. The complete lack of transparency in the pay system makes it easy for a few bad apples to abuse. Even the good ones don't get it 100% right every year, promotion to somebody you think should be fired, 1PBC for mediocre work, 2PBC for groundbreaking work, good bonuses in bad years and bad bonuses in good years. Just get a manager who isn't a lying sleaze, do good work, and over a few years it will average out. At every step advocate for yourself, because nobody else will. If you want to get rich start your own business, but if you want a steady income and some technically challenging work IBM isn't a bad place to be. -Anonymous42-
    • Comment 05/1/07: Salary = 101k; Band Level = 8; Job Title = Senior IT Specialist; Years Service = 10; Hours/Week = 40; Div Name = IGS; Message = 1997 band 6 starting salary 42k, 2007 band 8 salary 101k. Ratings, four times 1, six times 2+ I've gotten a raise and bonus every year, but they get smaller and smaller. -hal2008-
    • Comment 05/1/07: Salary = 101K; Job Title = ADVISORY Software Engineer; Years Service = 18; Hours/Week = 40-50; Div Name = STG; Location = Poughkeepsie; Message = For those less than the midpoint in your band, this will probably be the ONLY year you get your "market-based adjustment". The wording says it's for "high demand countries". I guess Brazil, Russia, India, and China win here. Although I did hear that HR is making the market based adjustments this year for fear of an uproar. I don't EVER expect to get a "top contributor award". They have taken our BAP/Performance Bonus away from us all. Somehow I doubt upper mgmt will fall under this criteria. I've been a solid 2 forever. S -JustAnotherSerialNumber -
    • Comment 05/2/07: Salary = $52,000; Band Level = 7; Job Title = teamlead; Years Service = 10; Hours/Week = 55; Message = What? "Band 7: avg: $73K, range: $57K to $110K" you say. Nutz, I've been with IBM for 10 years and I'm making 52K, and I'm not some lackey, been a 2 or 2+ every year..... you need more respondents. -LEANing toward the Door-
    • Comment 05/2/07: Salary = 77k; Band Level = 7; Job Title = IT Specialist; Years Service = 8; Hours/Week = 40+ Div Name = igs; Location = northeast; Message = 2+ ratings -joe schmo-
    • Comment 05/2/07: Does anyone know to what extend they will do the MBA (market based adjustment)? Will my salary be adjusted to the midpoint? or it will only be some percentage? And who will determine the amount? My manager or HR? My pay now is barely below the minimum of my band/job family. I am in job family 01A and band 7 Thanks in advance. -Anonymous-
    • Comment 05/2/07: Salary = 77,000 + overtime; Band Level = 5; Job Title = Specialist; Years Service = 30; Hours/Week = 40+; Location = east coast; Message = Have been rated a 1 performer for the last 12 years and during that time had 6 years of no raises. My salary has not keep up with inflation. I hope the new salary plan means more increases for IBM's top performers. -Moses-
    • Comment 05/2/07: Salary = 53,600; Band Level = 6; Job Title = Systems Integration Professional; Years Service = 6; Hours/Week = 45+; Location = W@H, Northeast; Message = Work @ home hired @ 51K after 6 yr making 53,600, :-( , even now a days new hires makes more then me.. -Prada-
    • Comment 05/3/07: Salary = 82k; Band Level = 7; Job Title = Assoc IT Architect; Years Service = 4; Hours/Week = 50; Div Name = GTS\ITD; Location = California; Message = How do I become a millionaire? -Anonymous-
    • Comment 05/4/07: Re: How do I become a millionaire? Apparently, all you need to do is steal it from your co-workers.. it's simple really. Subscribe to the idea that greed is good. It sure worked for Sammy and his band of Capitalists! yeah.. super capitalism.. how's it working for you so far? -pensionpoor-
    • Comment 05/4/07: Salary = 91k; Band Level = 9; Job Title = Senior IT Specialist; Years Service = 14, but only 1 with IBM; Hours/Week = 40+; Div Name = Tivoli; Location = Atlanta; Message = I was 85k + 15% quarterly bonus until ISST took away our bonus. -X-
    • Comment 05/5/07: Salary = 76000 CDN; Band Level = 7; Job Title = Advisory Technical Services Professional; Years Service = 3; Hours/Week = 40; Div Name = IGS - SSO; Location = Canada; Message = Pager pay is $210 a week now - down from $450 a few years ago. -Anonymous-
    • Comment 05/5/07: Salary = 90k CDN; Band Level = 8; Job Title = Technical Lead; Years Service = 18; Hours/Week = 55; Div Name = IGS; Location = Ontario, Canada; Message = Includes free of charge permanent 2nd line on call and no paid o.t -Anonymous-
  • PBC Comments
    • Comment 04/30/07: Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 1500; Prior Yr Bonus = 1500; Message = You are an idiot if you think that everyone fairly receives a "1" rating. Either you have the extremely rare coincidence of having an actual "fair" manager, or you are buddies with them or giving special favors. I worked my ASS off for years and still have never received the elusive "1" rating. It is reserved for the managers pets, their personal friends, old IBMers daughters, and hot chicks. I know their are plenty of overpaid lazy bums at the company, but don't act like the system is always fair because it certainly is not. Management rarely evens knows what's going on outside the internet and worthless meetings with a bunch of overeducated geeks spewing the most idiotic ideas ever to reach human ears. -johndoe-
    • Comment 04/30/07: RTP Guy: Yeah IBM expects lots of work for very little $$$. Two folks left our team a bit ago - strong performers - they went to work for other local employers - both of them almost doubled their salaries. They anticipate bonus payments next year on the high side of $10K. So as the strong performer that you obviously are, don't hide in the"shadows" at IBM -- you know that the 1's don't get the big bucks they deserve you get a measly couple of percentage points over the 2 performer if that ... Go get what you are really worth elsewhere! -Anonymous-
    • Comment 05/02/07: Prior Yr PBC = 2; This Yr PBC = 2; This Yr Bonus = 1500; Prior Yr Bonus = 0; Message= RTP GUY - It's very apparent that you should put your nose into how the PBC plan really works and get it out of where it is actually at. You better believe what these comments say because they are true. 1 performers are rewarded for what the say and think to management, not for what they actually do. Wake up! Your next manager may not like you so much and your comments will be the same as the rest... -Roch_Retrd-
    • Comment 05/02/07: Prior Yr PBC = 3; This Yr PBC = 2; This Yr Bonus = 2K; Prior Yr Bonus = 0; Message = To 3too and PBC fraud: I was able to change jobs with an undeserved 3 rating, but only after making a LOT of noise. A LOT. I fought to have the 3 raised. It was full of inaccuracies and plain old lies. I went through the appeals process and people who never met my manager or me ignored my COMPELLING evidence and decided for management. Big surprise. I kept making noise and finally was transferred to a position I am great at, that suits me and accommodates my disability. Because of my limitations I do not expect to receive the highest ratings anymore (although the 1 rating is oh so elusive). Strange how a high performer can become sick and instead of "What's wrong? After 10 years of good reviews, you seem to be having trouble? How can I help?" it was "Disability? You never told me you had a disability (I did). You are just saying that now to keep from being penalized for poor performance." Does anyone know of an appeals process that came out in favor of the employee? -AlmostPBCVictim-
Vault Message Board Posts:

Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. A few sample posts follow:

  • "Try again" by "Dose of Reality". Excerpts: We will never out-Wipro Wipro – our corporate cost structure is too high. All the moves being made in that direction are nothing more than temporary band-aids. We deal in long-dated contracts, which are not tied to the specific members of the team. Swapping out cheap offshore labor has an immediate cost savings, but an intermediate-long term revenue impact, since the clients can’t walk away from the contracts when all the Johns are replaced by Ravis. This is nothing more than a big bait-and-switch strategy, even on new contracts. The current customer backlash is precisely why we are in the dumps, and putting our foot to the floor on the offshore accelerator is not the answer.

    I don’t blame the offshore workers – they are acting quite rationally – taking advantage of a short term arbitrage opportunity. That being said, there is a much more pervasive tendency for them to inflate and exaggerate their skills, and they still have a hard time feigning humility – I think someone needs to revisit the curriculum of those E-mail and Phone-manner etiquette courses. The turnover is also extraordinarily high. When you factor in the skill gaps, turnover, and client perception, this model doesn’t provide any lasting benefit.

    The fault is with management, who continue to pour resources into a model that has outlived its long term value. You don't need to look any farther than the trend in the IBM market cap to see how effective our current strategy has been.

  • "Solution to IBM's problem" by "atrayapr". Full excerpt: I think a good solution to IBM's problem is to become a wipro clone. All upper management from the US,mid management from India and a significant portion of the workforce from india. This would solve communication problems that people like DOR face. Also, IBM-US employees should be made to take a national level competitive test in India. The results will put a rest to the argument about analytical capabilities of Indian engineers.It will also show people like DOR why the outsourcing phenomenon is not likely to stop anytime soon.
  • "I have your test right here" by "Dose of Reality". Full excerpt: Question 1: You are manning support phones for a help desk, and are transferred a call from someone that has had connectivity problems for the past 48 hours. He is irate, has missed several critical deadlines, and has berated the initial caller for all of the previous screw-ups. How do you answer the phone:
    1. Company X help desk how can I help you?
    2. Company X help desk how can I help you?
    3. Company X help desk how can I help you?
    4. Anything but that

    Question 1b: The customer screams at you for the lack of follow-through and inability to resolve the issue. Your response is:

    1. I am sure that I can help you with that; may I put you on hold for a minute?
    2. I am sure that I can help you with that; may I put you on hold for a minute?
    3. I am sure that I can help you with that; may I put you on hold for a minute?
    4. Talk to him like a human being

    If your reaction to d. is “why would I want to do that - it is not in the script”, then you are definitely at the head of your class.

    Question 2: You have received a functional spec from a client in the U.S. You don’t understand what it is they need. What is the proper course of action?

    1. Ask him why he wants to do that and offer to give him a piece of code you wrote for another client
    2. Write a long e-mail with many complex nested select statements and other queries to try to clarify the requirement
    3. Write a long e-mail and justify why it is that you will need to bill double the work days to get it done, since you had no idea how complicated this was when you put your original estimates together
    4. Tell the client that he does not know how to write proper English, otherwise you, who have studied ESL for several years, would know exactly what he wanted.
    5. All of the above

    Question 3: You are trying to debug some code, but you can not achieve the expected results. What do you do?

    1. Change the expected results to match what you are getting
    2. Tell the client that according to the accounting course you took in the IIT, his results are wrong
    3. Call a real business savvy programmer in the U.S., and ask for help
    4. Tell the client you got the right results and when it fails on his user test, blame him for not having the right inputs

    Hint: If you choose option C, then you will flunk immediately, since the entire Ponzi scheme rests on maintaining the mystique that engineers in your country are actually capable of doing anything but question 1 above.

    You have obviously missed the entire point on where the value gap is. Passing a trumped up, heavily coached “national level competitive test” doesn’t mean anything when it comes to client service. You can teach a monkey to regurgitate on demand. I have yet to see a standardized test that can assess resourcefulness, ability to improvise, and an understanding of the context for what you are doing, let alone an intuitive understanding of relevance and the business value of what you are doing.

    That is where the gap is, and the empirical evidence is in – the gap is huge.

  • "Both sides of your mouth pt 2" by "Dose of Reality". Full excerpt: As to the preferences of clients, I already told you in an earlier post that my clients do not want offshore tech heads on the project. I do not struggle to make my numbers, precisely because I have not compromised on resource quality, experience or personal presentation. I have staff from all nationalities, even those with the blood of your ancestors, but they have been here for a few generations, and bill out at those over-the-top rates. Clients happily pay it, and I make sure they get business value for the fees they pay me. In case you didn’t know, that is the consulting business model, it is not "attention Walmart shoppers".

    The rest of IBM sells offshore labor, because they don't connect the resource mix to the contract. The backlash comes after the fact, and that is why renewal rates are down, as is the market cap of IBM, while we have been pursuing this suicidal race to the bottom of the labor pool. So the question is not about "why they aren't beating down MY door to save them from ruin", they are running away because IBM is beating down your door to stock up on product that clients will not accept.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.